If there were ever an asset class that novice as well as experienced investors could always rely on, it’s real estate. Unlike many other investments you could make on your rise to business success, real estate is stable, safe, and boasts a high ROI potential. Of course, that doesn’t mean that success in real estate is a given, rather, it means that this asset class provides you plenty of flexibility and a stable foundation to launch your career, provided that you make all of the necessary preparations and devise a strong business strategy.
That is why today we are going to cover the five important tips that will help you launch a successful career as a property investor, and pave the road to long-term success as well. Here’s what you need to know.
Decide on your primary niche and business model
The first consideration that deserves your attention is the business model. Now, there are many crucial factors that will shape your business strategy, but the most essential one for a novice investor is to decide on your primary niche. In real estate, you can choose between residential and commercial properties, and while both can generate a high ROI, they require very different ways of thinking and modes of investing.
Both commercial and residential properties give you the opportunity to generate sustainable income, or make a one-time sale and move on to acquiring the next one. It’s important to research your local market (more on that in a bit) and discover its most lucrative potential. Typically, commercial properties not only cost more but pose greater risks as well, especially for new investors, as there are many factors that will influence the customer’s buying decision.
That doesn’t mean that selling or renting a residential property is easier, but you can expect to acquire it for a smaller capital investment and attract potential homebuyers more easily. This is why aspiring investors should consider making their first big investment in the residential sector.
Research markets and socio-economic trends
Of course, this might not be the case for you – only meticulous research will provide a definite answer. It’s important that you conduct a thorough market analysis and create a detailed SWOT chart that will outline the unique strengths, weaknesses, opportunities, and threats in your local market. You can improve this analysis by looking into online statistics, trends, and forecasts for your local area that will tell you the direction the market is heading.
For example, as the need for rapid urbanization continues to rise around the world, and as consumers are increasingly looking to enhance their work-life balance, you might discover that your residential district is quickly becoming the business hub of the city. This presents a golden opportunity to invest in commercial real estate to capitalize on an emerging trend.
Find the hidden gems in your market
Another important consideration to keep in mind is that you can’t expect to generate sizable returns on a property just because you got it for a low price, or because it’s situated in an emerging part of town. No, modern tenants (whether residential or commercial) are looking for the best of the best nowadays, and they are willing to pay top dollar for those hidden gems in your market. If you want to make it big quickly, these are the types of buyers and tenants you should be targeting.
This is one of the primary reasons why real estate investing is not a solo venture, and why new and experienced investors often work closely with a well-connected property investment company that can provide strategic guidance when researching properties, assessing risk vs reward, and most importantly, when it comes to finding the best properties on the map. Whether you’re able to find out about these properties on your own, or if you choose to work with other professionals, the most important thing is to not let these opportunities slip through your fingers.
Discover the most cost-effective funding options
One of the most important question you need to answer is how you are going to fund your new business venture, and invest in your first property. The problem here is not a lack of funding options, because there are many, but the fact that you have to choose one with the highest ROI potential, low risk, and reasonable terms.
For example, you can choose to pool your capital with other investors, and make a joint venture to disseminate risk. This also means that you’re not the sole owner of the property and that you will be sharing your profits. Another option is to apply for a loan from a reputable banking institution, which guarantees that you will stay in complete control of your asset – but you have to qualify with a sound business plan and a stellar credit score. There are pros and cons to every option, so be sure to do your research.
Invest heavily in marketing and technology
Finally, you can’t expect a property to sell or rent all on its own. It might be the best property in the neighborhood, but people will only find out about it if you invest in effective digital marketing tactics, as well as some offline marketing tactics such as billboards, flyers, and a couple of radio and TV ads. What’s more, be sure to invest in your website, because potential buyers will first research the property on your site before getting in touch. If you go the extra mile to include virtual tours into the site, you will elevate your chances of success.
Becoming a real estate investor is one of the best ways to build a thriving business and pave the road to long-term affluence. That said, be sure to implement these tips into your business strategy in order to improve your odds in the competitive market and make all the right decisions in the process.